The Big Idea

Q: What steps do I need to take to get a concept for a
software program from the idea stage to the distribution
stage?

Kevin Reese
Olney, MD
Via e-mail

A: To answer your question, we called upon two
entrepreneurs who have been extremely successful at bringing
software products to market. Jon Ferrara is the executive vice
president and co-founder of GoldMine Software Corp. in Pacific
Palisades, California. The company was founded in 1989 by Ferrara
and his partner, Elan Susser. We asked them how they brought this
two-person company, started in an apartment, to a 100-person
company with more than 500,000 customers.

Ferrara says to be successful in the software industry, you need
three components:

1. Unique technology. With all the programs
already out there, your idea must be new and different to
succeed.

2. An innovative selling position. Differentiate
your product from others in the same category.

3. Value that is easily communicated. People want to
know what a prod-uct can do for them.

Ferrara advises that in today's software marketing climate,
it's better to find a software category to build from, rather
than inventing a new category. Essentially, unless you have a lot
of marketing dollars behind you, you'll be hard pressed to
convince users they need to purchase your completely new product.
Instead, you need to convince them your product will either enhance
an already successful product or better suit their needs than the
product they're currently using. For example, GoldMine extended
the contact management category started by ACT! by creating a
network-abled contact manager (for tracking sales leads,
maintaining contacts, generating reports and communicating with
team members).

If, unlike Ferrara and Susser, you are not a software programmer
yourself, you'll need to hire one to implement your idea.
Finding one these days isn't too difficult, and the Web is an
especially good resource for filling these types of positions. If
you don't have the funds to pay a programmer, you may be able
to find someone who will accept partial ownership of your company
as compensation. Of course, you need to be extremely wary about
whom you bring into your business, and you should verify a
programmer's credentials thoroughly before moving forward.

To take your product to market, you're going to need a
marketing plan. You can either look for investment capital to fund
your business or you can go it alone. Because investors often
require a portion of ownership or control, bootstrapping your new
business may be more appealing. That's what Ferrara and Susser
did: "We started with $3,000 and no bank loans and grew our
business into a $20 million com-pany," says Ferrara.

To successfully take GoldMine to market, the partners had
to creatively market the product to their audience with very little
money. They went to the most obvious user of the product--VARs.
Knowing that it's easier to sell what you know and what you
use, the partners created a plan that got full running copies of
GoldMine into the VARs' hands for a nominal fee. This worked
well to get the VARs to sell the product, but then Ferrara and
Susser had to make sure the VARs' customers were aware of the
product. That's when they turned to public relations to
increase awareness. After the product was a success at this level,
the partners were able to easily enter the retail market with a
single-user product that didn't threaten their VAR sales
channel.

Q: Which is the best accounting program for a small
business? How will it need to change as the business grows?

A: Small-business owners need a product they can not
only afford but can easily figure out. Intuit's QuickBooks is
such a product. Intuit, maker of the popular personal finance
program Quicken, decided to develop QuickBooks in the early
'90s after it realized that nearly 7 million Quicken users were
already harnessing Quicken for their small-business accounting
needs. A survey revealed these small-business owners just
didn't "get" the other accounting programs out
there.

Accounting practices, such as double-entries, posting and
closing, and working from a general ledger, are foreign to most
small-business owners. You need a program that does all the genuine
accounting but does it in the background so all you have to do is
enter information. Other products have followed Intuit's lead
in creating easy-to-use programs, including BestWare's M.Y.O.B.
Accounting Plus ($149) and Peachtree Software's Peach-tree
Accounting for Windows Release 5.0 ($129). The easiest of these
products is still QuickBooks; however, special needs might make one
of the other two more desirable.

One of the reasons I prefer QuickBooks is that it is
customizable for your business. An interview process takes you
step-by-step through the setup and asks about your business to
determine how your interface should be set up. For example, it will
ask if you have employees, and if you don't, the payroll aspect
of the program will be turned off. If you add employees at a later
date, you can turn the payroll function back on. Another nice
feature of QuickBooks is its easy and customizable reporting
capabilities.

Before you decide on a product, determine exactly what you need.
For example, Intuit offers two versions of QuickBooks--the standard
one at $99 and a $199 enhanced version for service-based
businesspeople, such as consultants, architects and freelancers,
that is capable of time tracking, job costing and estimating.

Another concern for any expanding business is the ability to
network the product so multiple users can access it. Currently,
both M.Y.O.B. and Peachtree support this function, while
QuickBooks' next upgrade, scheduled for release this summer,
promises to address it. Of course, some businesses demand a program
that is dedicated to its industry. There are numerous high-powered
accounting programs you can look into as your business grows. The
best bet, however, is to discuss your needs with people in your
industry to find out what products have worked best for them.

Cassandra Cavanah is a contributing editor of Portable
Computing Direct Shopper magazine and has reported on the computer
industry for nine years.

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